Model Gold Portfolio: Short Position, (signal= Oct 1)
Technical Read: GLD moved decisively higher mid-day before settling near the lows of the day (with similar action in bonds and the S&P). This rally in the yellow metal has been painful for the Mummy. My indicators are very divided at this point, with the edge going to a resumption of a bearish move. This scenario would indicate we are at the top end of a trading range with little energy left. The current concerns in the market place have limited sellers thus inducing lift for the past week or so. I hope this will soon resolve itself. By the way, the quote is from Churchill.
Backdrop:
Catalyst 1 – The deflation alert is on. Petroleum watchers are now expecting OPEC to maneuver in favor of market share not price increases. This translates into no-price-hikes for Texas Tea and the crude market is reflecting that. A global economic contraction is negative for asset prices. That has negative implications for gold.
Catalyst 2 – The US dollar index traded lower before trimming losses by the end of the New York session. The close at 85.09 is below the approximate 85.50 support level. This is bullish for gold.
Catalyst 3 – The S&P 500 had an eye-popping day featuring a hefty bolt-the doors selloff midday, with losses being trimmed significantly by the close of the day. If the S&P can hold here, it would be negative for gold.
Bond Trading Signals. I am offering a similar Mummy process for Treasuries. See the “Bond Trading Signals” tab for more info.
GH Garrett – Veteran Commodity Watcher for ConquerTheMummy.com
Model Gold Portfolio: Short Position, (signal= Oct 1)
Technical Read: GLD managed to retake (plus a little) our sell signal levels, but still closed in the trading range (3 week or so) just below the 118 level. The four-day rally had a short-covering feel to it as if gold traders more interested in trimming their short positions instead of really going long. Momentum indications have pulled off their lows as well. We still have the short signal one but I am looking for this week’s trading to tip the hand of the gold market.
Backdrop:
Catalyst 1 – The Fed minutes reeked of the phrase “data-dependent”, which basically means the central bank is laying the intellectual groundwork for delaying tightening. This along with reductions in Fed growth forecasts is signaling market watchers to be on the alert for deflation. As a side note, the IMF cut its global growth forecasts as well. Deflation is a negative for gold in general but in the knee-jerk aftermath of a crisis, the yellow metal could jump. Watch for signs of a refuge play.
Catalyst 2 – The US dollar index went below the near-term 85.50 support level before closing the week back above it. In a crisis, the dollar is also likely to pick up a bid and this is negative for gold.
Catalyst 3 – The S&P 500 had sustained some wild daily gyrations recently but Friday’s close has put the widely-followed index at the approximate lows of August. If stocks catch a bid it would be mildly bearish for gold. The Mummy is still neutral on the S&P.
Bond Trading Signals. I am offering a similar Mummy process for Treasuries. See the “Bond Trading Signals” tab for more info.
GH Garrett – Veteran Commodity Watcher for ConquerTheMummy.com
Model Gold Portfolio: Short Position, (signal= Oct 1)
Technical Read: Gold climbed recovered about 2/3s of Friday’s loss (based on GLD trading) on Monday, reacting to a drop in the dollar (see catalyst 1) and possibly a story circulating that part of the previous week’s damage came due to a large errant trade. There was limited follow-through buying the next day. Tuesday’s close was roughly in line with the previous channel (lower) resistance, a dubious position for further advances this week. My readings are still negative and I would not be surprised if we have seen the highs of the week.
Backdrop:
Catalyst 1 – The US dollar index had a bad day on Monday and limited follow-through selling the next day (roughly mirror imaging gold). The the dollar is now resting on near-term chart support (85.50). If dollar picks up a bid going into the weekend, this will be bearish for gold.
Catalyst 2 – The S&P 500 sustained considerable selling today. Stocks are nervous about global slowing that appears to be centered in Europe. A sustained whiff of deflation could really shake the ground. However, I am not sure stocks have much more to fall in the near-term. The S&P bears face significant support just 25 points lower. The Mummy is not signaling much more to the downside either. Severe equity selling would be supportive for gold, but if it has a deflationary theme, both could end up going down together.
Bond Trading Signals. I am offering a similar Mummy process for Treasuries. See the “Bond Trading Signals” tab for more info.
GH Garrett – Veteran Commodity Watcher for ConquerTheMummy.com
Technical Read: Gold fell hard in Friday’s trading as longs didn’t want to wait for Monday to liquidate positions. The move established a breakdown from the previous trading range and undoubtable triggered many mechanical trend following systems. Our last two signals have the advantage of giving traders time to re-position before the trend change. What now? This crack is sufficient to send reverberations through the system (margin calls feeding the selling), so we should see more selling ahead. We are chasing the mummy.
Backdrop:
Catalyst 1 – The leap in the dollar broke the back of the bulls and is going to make it hard for them to regroup going forward. Another issue: Currency trends have a reputation for lasting. This (again) is bearish for the yellow metal.
Catalyst 2 – Stocks (as measured by the S&P 500) did not help gold on Friday either. The explosive rally largely erased Wednesday’s significant selloff. Despite the recent equity gyrations, the Mummy considers the US equity market as neutral. This is bearish for gold now but will probably not be sustained.
US Government Bond research. I am offering a similar Mummy process for bonds. Treasuries halted their advance over the last couple of days. Our signal on this is neutral, so the Mummy is on the hunt for a new signal. A valuable signal for some institution. See the “Bond” tab for more info.
GH Garrett – Veteran Commodity Watcher for Conquer the Mummy.com
Model Gold Portfolio: Now short, 100114 (from Neutral, 9/19 signal)
Technical Read: Gold has been trying to form a trading bottom for almost 2 weeks, but it has been a sloppy, ill-defined bottom with not much conviction. Today my readings indicate the recent lows are not going to hold and Mummy watchers should expect lower prices ahead.
Backdrop:
Catalyst 1 – The dollar strength is throttling gold. Today gold managed an up day but one wonders if it would have been so if the S&P 500 hadn’t dropped 26 points. This is bearish for the yellow metal.
Catalyst 2 – The varied geo-political concerns (Hong Kong, Middle East and Ebola virus) are not really pumping the bulls here. The may provide some support going into a weekend. Mildly bullish.
US Government Bond research. I am offering a similar process to the gold comments for bonds. See the “Bond” tab for more info. Recently (9/19), the bond readings changed from short to exit short (neutral) and this has been a productive signal.
GH Garrett – Veteran Commodity Watcher for Conquer the Mummy.com
Model Gold Portfolio: Neutral (9/19 signal, exit short)
Technical Read: Today’s gold trading was a turbulent affair. Overnight selling set the stage for a gap-down opening in COMEX trading. There was a morning rally but it failed by the end of the day. At the close, GLD held at the approximate low levels of the recent pause. It was a long day for the bulls (not as long for the Mummy as our signal was neutral). My readings are not indicating significantly lower prices.
Backdrop:
Catalyst 1 – The strength of the US Dollar is pressuring gold prices and carries with it the whiff of global deflation (dollar strength and deflation are riding in the same car these days, unfortunately it is hearse). This is bearish for gold.
Catalyst 2 – Hong Kong demonstrations (and the police response) has taken less confrontational stance today as local politicians struggle to find a way out. This is bullish for gold as it is a new (and developing) situation.
Catalyst 3 – The verification of another victim of the Ebola virus in the US is probably not a market mover. But it does serve as a point of concern of thisng to come.
US Government Bond research. I am offering a similar process to the gold comments for bonds. See the “Bond” tab for more info. Recently (9/19), the bond readings changed from short to exit short (neutral) and this has been a productive signal.
GH Garrett – Veteran Commodity Watcher for Conquer the Mummy.com
Technical Read: Gold traders prepared to start the week with renewed selling, however the bears did not manage rout the market. The yellow metal continued to hold the recent narrow range. This combined with the over-extended nature of the previous decline gives the gold market a mild bullish edge on the technical read front.
Backdrop:
Catalyst 1 – The US Dollar trading uptrend continues to be a formidable headwind (bearish) for the gold market. During the weekend this appeared to be the dominant trading story on the metal, BUT…
Catalyst 2 – Political unrest in Chinese produced stunning images as youthful demonstrators clashed with government police forces, in Hong Kong, through a haze of teargas. The scene brought back memories of Tiananmen Square in 1989. By the end of the day, the protesters remained in the streets but the clash seemed to lose its edge. This outbreak to flared up and caught markets off guard as a new risk factor. This new piece on the global chessboard is bullish for gold.
US Government Bond research. I am offering a similar process to the gold comments for bonds. See the “Bond” tab for more info. Recently (9/19), the bond readings changed from short to exit short (neutral) and this has been a productive signal. The Hong Kong unrest is positive (flight to quality) for US Treasuries and therefore supportive for gold.
GH Garrett – Veteran Commodity Watcher for Conquer the Mummy.com
Technical Read: Gold traders came into the day with a bearish disposition with pre-Comex trading down $9 dollars (see catalyst 1). Gold opened near the lows of the day. This level was a little lower than the previous near-term bottom (9/22). However, after triggering various sell-stops in place, the market rebounded (see catalyst 2) as sellers were unable to push their advantage. During the recent sustained downtrend, bears have become vulnerable to short-covering. With readings now neutral, traders can now enjoy the luxury of taking a moment to reflect on what the upcoming trend will be and prepare to take advantage of it.
Backdrop:
Catalyst 1 – The US Dollar broke out to the upside following a narrow trading that terminated on 9/16. The dollar-going-up theme (which is bearish for gold) was the dominant theme going into the day from European trading.
Catalyst 2 – Initial weakness in equities continued to accelerate during the day and at some point became supportive for gold. Traders began to question if being short gold was really a good idea ahead of a weekend with a possibility of an equity crash. My read is that stocks are not really in a bearish downtrend but today’s action did breakdown from a recent trading range. For now this is bullish for gold.
US Government Bond research. I am offering a similar process to the gold comments for bonds. See the “Bond” tab for more info. Recently (9/19), the bond signal moved from short to exit short (neutral) and this has been a productive move. This is a white horse of sorts for bullish gold traders as it marks an end to the trend of rising rates.
GH Garrett – Veteran Commodity Watcher for Conquer the Mummy.com
Technical Read: When a market (gold) trend becomes sustained in a certain direction, eventually the market trend gains a certain fragileness (i.e. becomes unsustainable). Then a catalyst event changes things and the traders (whom may have become complacent) find themselves caught by a reversal. I believe the trend has now changed and the downtrend is now over. The good news is that the day after the signal, the market moved lower, thus providing a reasonable time for Mummy followers to exit their bearish positions.
Backdrop:
The bullish catalyst leading to Tuesday’s pop in the yellow metal, were the US airstrikes directed at ISIS/ISIL related targets in Syria. The widening of the conflict joins a loose confederation of regional anti-ISIS ground fighters with the heavy handed power of US airstrikes against the Islamic extremist forces. There is an added factor of some type or retaliation against the US (terrorism). Only time will tell how effective that will be. For now this is bullish for gold.
China’s (Flash) Manufacturing Purchasing Manager’s index (PMI) proved a little more robust (50.5 versus 50.0) than expected. This is a positive for the world’s financial markets but there was considerable nervousness about a contractionary reading before the report came out. Concerns about deflation are negative for gold.
US Government Bond research. I am offering a similar process to the gold comments for bonds. See the “Bond” tab for more info. Recently (9/19), the bond signal went neutral. This is supportive for gold.
GH Garrett – Veteran Commodity Watcher for Conquer the Mummy.com
Model Portfolio: Signal Change: Now Exit Short (9/19) from Short Signal (7/31)
Technical Read: Okay, here it is: the gold mummy signals are no longer bearish but are now neutral (AKA flat). This is not the same as a trend change to bullish but simply indicates the trend is indeterminate and that gold traders should consider pulling the plug on their shorts. Momentum indicators have moved from bearish to overextended. This is primarily a technical call and I have no new ‘backdrop’ bullet points to share for now. Tip: Don’t let the gold mummy grab you!
GH Garrett – Veteran Commodity Watcher for Conquer the Mummy.com
“Use nonlinear research to help determine the future direction of the S&P and trading can become much less complex.” GH Garrett
Technical Read: GLD moved decisively higher mid-day before settling near the lows of the day (with similar action in bonds and the S&P). This rally in the yellow metal has been painful for the Mummy. My indicators are very divided at this point, with the edge going to a resumption of a bearish move. This scenario would indicate we are at the top end of a trading range with little energy left. The current concerns in the market place have limited sellers thus inducing lift for the past week or so. I hope this will soon resolve itself. By the way, the quote is from Churchill.
